ISLAMABAD: Pakistan has repaid $1 billion to the Kingdom of Saudi Arabia on Wednesday as a second instalment of a $3 billion soft loan after Beijing agreed to provide a $1 billion financing line to Islamabad.
This is the second time China has come to Pakistan’s rescue to repay the Saudi debt. Earlier this year, Islamabad repaid $1 billion to KSA in the first quarter of the current fiscal year. With the latest repayment, Pakistan has so far repaid $2 billion out of the total $3 billion debt. Islamabad had paid mark up of over 3% on SAFE deposit.
Saudi Arabia provided Pakistan with US$3 billion in loans and US$3.2 billion in oil credits at the end of 2018.
The money was deposited into the National Bank of Pakistan on December 15, 2018, for a period of three years. Islamabad will repay this amount in advance.
The last $1 billion payment will be repaid next month.
With the new facility, Pakistan’s reliance on China increases. The country’s financial account has already turned negative to the tune of $1.33 billion because of an outflow of dollars.
So far, increased remittances helped Islamabad avoid an eruption of a full fledged balance of payments crisis as remittances from abroad remained over $2 billion in the last five months.